Question-and-Answer Session
Operator
(Operator Instructions). And your first question comes from the line of Colby Synesael with Merriman. Please proceed.
Colby Synesael - Merriman
Great, thank you for taking my question. Your residential revenues were very impressive this quarter and you talked about stability in that segment. What is that something that you guys believe it's going to continue? And two, if it is or :can you please us a little idea what is it that you are seeing that's really changed probably over the last three to six months that's allowed you a piece of confident in that?
And also on the profitability side: is there other ways in which you guys can continue to improve the profitability besides just scalability, other areas we got could actually continue to reduce cost so that we could continue to see the gross margins increase?
Bryan Martin
Okay, Colby. This is Bryan. So in general I think we've seen hopefully the rate of reduction on our residential business begin to stabilize. We've seen this as a trend certainly with the exit of some SunRocket, which was the major provider that was at a price point substantially below us, we began to see some strength in our business after that.
We also see a very good strength in the rate of renewal of our annual plans and so we are seeing those renew at rate of about 90%. Is that correct Dan?
Dan Weirich
Yes.
Bryan Martin
So one of the things as we get to the summer time again, July and August timeframe, we are expecting to see those consumer subscribers that came over from SunRocket pay us for another year and provide additional cash.
We also see all of these opportunities that I hinted at during the call, of other service providers that are exiting the space, wanting to outsource their operations to us. So we are cautiously optimistic here that our residential business may not decline as fast as we previously thought it might, just based on the rate of decline we saw, for instance in the September quarter. So that answers that question, I'll let Dan to comment on the second now.
Dan Weirich
On your gross margin question: ?yes?, we are continuing to see a very good pricing environment from the network side of our business. It is continuous, its going to exceed our expectation on where we can go and the cost to on support the customer. So things are looking very good there and we don't expect that to end anytime soon.
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